There Is No One Definitive Answer

[rayboyusmc]

As each side throws blame on the other, maybe each should read some of the facts.

So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role." Here's a partial list of those alleged to be at fault:

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.


Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.


Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.


Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.


The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.


Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.


Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.


Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.


The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.


An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.


Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.

FactCheck.org: Who Caused the Economic Crisis?

What I haven't been able to find is the percent of loans to low income people vice the percent of recent loans to middle income and speculators who defaulted on their loans and helped fuelthe housing crash and the resultant bank failures.

 

[Chris]

The cause of the collapse is two fold.

One is that there was no risk to mortgage companies to loan money to poor credit risks because they were able to sell the loans on the day after closing.

The other cause is that the derivative financial instruments allowed banks to lend more money than they had on hand, so it was just like the low margin problem that caused the 1929 crash.

 

[dilloduck]

The cause of the collapse is two fold.

One is that there was no risk to mortgage companies to loan money to poor credit risks because they were able to sell the loans on the day after closing.

The other cause is that the derivative financial instruments allowed banks to lend more money than they had on hand, so it was just like the low margin problem that caused the 1929 crash.

Whoever trusted someone else with their money is to blame. This one is simple.

 

[AVG-JOE]

Apparently there was "insurance" sold on the MBS's that was not backed with the funds required for insurance so they called them 'Credit Default Swaps'. 60 Minutes did a story on them that is pretty telling. Apparently the bad values here run into the tens of trillions - 700 Billion is not even a decent band-aid.

http://audio.cbsnews.com/2008/10/05/audio4502780.mp3

Simple, stupid, unregulated greed.

-Joe

 

[rayboyusmc]

The band aid will spring another bloody leak in a short time.

More of fixing the sympton and not the root cause.

 

[xsited1]

The voting record shows that true conservatives voted AGAINST the bailout, while moderates and liberals voted FOR it. People should remember this while in the voting booth.

This bill needs to be passed now:

H.R. 2755: Federal Reserve Board Abolition Act

 

[Kevin_Kennedy]

The voting record shows that true conservatives voted AGAINST the bailout, while moderates and liberals voted FOR it. People should remember this while in the voting booth.

This bill needs to be passed now:

H.R. 2755: Federal Reserve Board Abolition Act

Agreed.

 

[Larkinn]

Whoever trusted someone else with their money is to blame. This one is simple.

So you have all yours stuffed in your freezer?

 

[AVG-JOE]

The voting record shows that true conservatives voted AGAINST the bailout, while moderates and liberals voted FOR it. People should remember this while in the voting booth.

This bill needs to be passed now:

H.R. 2755: Federal Reserve Board Abolition Act

Thanks for the post, bro'!

E-mails have been sent to DC... I hope they realize their jobs depend on this stuff!

-Joe

 

[xsited1]

Thanks for the post, bro'!

E-mails have been sent to DC... I hope they realize their jobs depend on this stuff!

-Joe

Most of the Democratic voters won't be listening. They're too brainwashed to understand what is happening.

 

[user_name_guest]

Most of the Democratic voters won't be listening. They're too brainwashed to understand what is happening.

That's how you raise a subordinate. Just check rayboy and sealybobo, they fit the stereotype. What a political party would do to get power, work from the bottom-up. Looks like its working.

 

[dilloduck]

So you have all yours stuffed in your freezer?

No---Just the bribe money is in there.